This month marks 10 years since India became the first country in the world to mandate CSR by law — requiring companies that fulfilled certain profitability criteria to spend at least 2 per cent of their average net profits over the preceding three years on social responsibility programmes.

What began as a unique experiment has unleashed significant capital for the social sector and the nation. CSR giving unlocked a total of ₹1,53,000 crore worth of capital towards social impact from FY15 to FY22, and a 2022 Bridgespan Group report noted that CSR giving represents the second-largest source of social sector funding in the country. At this rate of growth, CSR could channel an additional ₹6,38,000 crore of capital for social development through 2033.

Before the law was implemented in April 2014, corporate giving was largely voluntary and unregulated, encouraged by the Ministry of Corporate Affairs. Whilst several companies gave back to society historically, many others began CSR in earnest only after the law came into effect, strategically aligning their CSR focus with business priorities.

In the initial years, a compliance mindset reigned with companies funding safely within the boundaries of the law what was convenient or proximate to their locations, and, often, what could get them publicity.

Compliance to impact

With a decade of experience, the focus of some CSR organisations has gradually shifted to the impact of their initiatives on both society and the business. They are investing in projects with clear, measurable outcomes, and beginning to bring a geographic and thematic focus to their work — believing that effective CSR programmes do fewer things well, rather than many things in a fragmented way.

For instance, JSW Foundation, the social development arm of the JSW Group, has sectoral heads for areas like agriculture and livelihoods, health and nutrition, and education, in addition to location heads in regions like rural Maharashtra and Karnataka.

The focus on impact has also changed CSR staffing from lone CSR leads — frequently double-hatting in their roles with administrative or HR or marketing functions — to dedicated CSR teams across roles and functions.

They are bringing valuable corporate strengths, such as strong programme management skills, and organisational capabilities in finance, HR, technology, and communications, to the work.

Often, top leadership is part of the team to inject a longer-term impact outlook. CSR teams also began engaging with the boards more often, outside the mandate of board meetings.

There has also been a cultural shift in how corporates approach CSR — viewing employees as important stakeholders and instilling a sense of ownership and pride by involving them in field visits and volunteer opportunities. As part of their employee engagement programme, EdelGive Foundation has connections with different non-profits that staff members can contribute their skills and expertise to, for example.

For impact to scale to population-level change, investment should reach underserved States with higher levels of poverty and lower SDG scores, and sectors that have historically not attracted private funding.

Yet, a forthcoming study by Give Grants building on Bridgespan’s analysis indicates that only 2 per cent of CSR funding currently goes towards districts identified as aspirational by the government. On the other hand, the wealthier States of Delhi, Goa, and Maharashtra receive the most CSR funding, on a per capita basis.

Skewed focus

Similarly, education and healthcare have been the highest funded sectors in the last eight years, with less than 1 per cent of expenditure directed towards solving socio-economic inequalities.

Therein lies the opportunity for CSR in the next decade. Corporates can catalyse impact at scale, over the long term, by scaling-in — deeper impact for select communities, for example, reaching aspirational communities around factories, across their social needs. Or they can do it by scaling-out — reaching a wider population, for example, through national initiatives that address the root causes of inequalities.

There is also a need to fund innovative solutions. Bajaj Finserv’s partnership with Neomotion, a start-up that creates wheelchairs and other vehicles for the differently abled, is a worthy example.

Investing in multi-year grants that enable NGOs to be more nimble and agile will create sustainable impact. Nanhi Kali’s girl child education project, which reached 2,000 girls in 2012, is now impacting nearly 20 lakh girls with multi-year support from KC Mahindra Education Trust.

The CSR law has led to a reliable, growing stream of funding for vital social change and has elevated social impact work to the highest levels of corporate decision making. Alongside India’s economic growth, a sustained effort from CSR leaders/corporate boards, non-profit partners, and the government can help address long-standing developmental and inequity challenges — to truly unlock greater potential of CSR giving in the coming decade.

Venkatachalam is a partner and co-head, Asia and Africa, and Gambhir is manager, at The Bridgespan Group